Australian Prudential Regulation Authority broadens section 66 exemption for foreign wholesale debt issuers to more foreign banking entities, keeps activity scope unchanged

The Australian Prudential Regulation Authority has finalised changes to its section 66 exemption for foreign entities issuing debt securities in Australian wholesale capital markets. The update expands the categories of foreign entities that can use restricted banking terms without an authorised deposit-taking institution licence, while leaving the exemption limited to wholesale debt issuance and not extending it to other banking activities. In addition to foreign banks, the final exemption will now cover foreign bank holding companies, foreign bank treasury companies, multilateral development banks and foreign subsidiaries of Australian banking groups. APRA retained the condition that exempt entities, or their parents or groups, must be prudentially regulated in their home country, except for multilateral development banks. Foreign subsidiaries of Australian banking groups must have an Australian parent regulated by APRA. The final position goes further than APRA's 2025 proposal after consultation feedback, but entities outside the defined categories must still seek APRA consent on a case-by-case basis. APRA did not broaden the exemption to other activities, citing the risk that customers could assume those entities are subject to the same regulatory standards as APRA-regulated banks if they use restricted terms more broadly. The final legislative instrument is available on APRA's website and will take effect in the coming weeks once it is registered on the Federal Register of Legislation.